Before joining Texas-based Victory Healthcare of The Woodlands, Gregory Cunniff co-founded an ambulatory surgery center company that grew to 19 centers across 10 states. The expertise he gained in the ASC field, as well as his diverse hospital experience, prepared him well for his role as executive vice president and CFO of Victory, which he describes as a full-service hospital company that embodies an ASC business model in its approach to serving its customers.
Mr. Cunniff, a 20-plus year healthcare services industry veteran, joined the Victory leadership team in September. Most recently, he worked at Los Angeles-based Oxford Surgical Specialties, a healthcare consulting firm he also founded. He has served as a board member and officer of the Ambulatory Surgery Center Association for more than seven years and also previously served on the board of governors and healthcare financing committee for the Federation of American Hospitals.
Here, he talks about his decision to take the financial reins at Victory, as well as what the future could hold for the healthcare system.
Question: You recently joined Victory from Los Angeles-based Oxford Surgical Specialties, a healthcare consulting firm. What drove your decision to take on a financial leadership role with Victory?
Gregory Cunniff: Having worked at Oxford, I had the benefit of being able to look at a number of different opportunities across a number of healthcare service providers. I thought that Victory provided a very unique opportunity in surgical care given their network and their growth over the last few years. When the opportunity presented itself, I was very happy to join the team.
Q: What are your and Victory’s biggest financial priorities, looking forward to 2014?
GC: Victory’s model has previously been out-of-network and generally not a federal program provider. We serve commercial payers, third-party administrators and patients.
We will continue to prioritize the doctor-patient relationship with operational directives to deliver exceptional patient care. We have extremely high patient and physician satisfaction scores, and our entire team will work to maintain these standards.
We’re growing strategically by adding two to three hospitals a year and looking at opportunities in very specific markets. We continue to have excellent physician relationships as we listen to them carefully and only help develop opportunities where they’re appropriate. In the last six months, we’ve opened three hospitals. We have a facility in Beaumont [Texas], which is beautiful. It serves the northeast side of Beaumont, and we do a lot of ER business there. We felt there was not only a surgical need but an ER need.
We also recently opened a facility on the northwest side of San Antonio. It’s called our “Landmark” facility. It’s a first-rate facility with 25 beds. In addition to that, we acquired a facility in McKinney‘s Craig Ranch community on the northeast side of Dallas. We look for key opportunities and key markets and work closely with our physician partners to grow.
Without federal programs, we have the opportunity to perform joint ventures both with our physicians and also with other healthcare providers including hospitals and hospital systems. We’re also looking at a couple of opportunities with hospital systems that want to provide a higher service level model. It’s very similar to an ASC model, but it’s a more sophisticated model because we are a full-service hospital system that can provide care that ASCs cannot.
Q: As you mentioned, Victory recently announced the opening of Victory Medical Center Craig Ranch, a physician-owned hospital in McKinney, Texas, as well as Victory Medical Center Landmark in San Antonio. Additionally, this past summer, the health system began construction of Victory Medical Center Fort Worth (Texas), which is expected to be completed in the fourth quarter of 2014. What are the main drivers behind this expansion strategy, and what’s in store for the future?
GC: Obviously, we want to grow as part of a carefully developed strategy. But we want continued and controlled growth. We’re not out just buying a bunch of facilities — this is not a rollup strategy. We’re going to grow where it makes sense. We’re not currently looking for facilities outside of Texas because there’s plenty of business in Texas, and the economy is doing well, but we certainly wouldn’t ignore the right opportunity.
Q: What’s the motivation behind Victory’s decision not to serve patients covered by federal healthcare programs?
GC: Much like an ASC model, Victory has physician partners. Engaging doctors in a partnership is part of our mission to create a new standard in surgical care. We’re precluded from doing this if we participate in federal health programs. We could own 100 percent of the hospital and take Medicare and Medicaid, but then the physicians could not participate as part of the hospital. Working with physician partners is a big part of the Victory model.
It’s not an exclusive model. Our physicians literally take ownership, and I believe it promotes a higher-quality service which our patients are willing to pay for. Our physician partners want to see the hospital have the best equipment, the best technology; the best of everything from clinical care to an appropriate staff-to-patient ratio. By being able to provide that quality, our infection rates are effectively nil. We also haven’t had significant malpractice claims. I liken it to the difference between owning and renting. If you rent a place and something falls on the floor, some may step over it. If you own it, you fix it. It’s the same way with our docs. They are owners and therefore are proactively making decisions — clinically, financially or otherwise — that I believe result in better outcomes, and our numbers support that. They have literally put their money where their mouth is — and in the case of surgeons, their hands. With doctor partners and owners, they are focused on performing sophisticated surgeries and providing a higher quality surgical experience, typically at a lower cost.
As it relates to discussions with our managed care payers, Victory doesn’t have to get the highest rates, although I believe our quality and service delivery model deserves them. Market competitive rates work well for us, and I think that presents another opportunity to third-party payers and their customers.
Generally speaking, our staff, our surgeons and our anesthesia providers…everybody are very focused on providing the right service with the right equipment in the most efficient manner. For example, turnover times are generally very quick in our facilities. Efficiency in the clinical setting provides financial efficiency and also generally provides for improved quality outcomes.
Q: Is there anything else important happening for Victory right now that you want to highlight?
GC: At Victory, we want to create a new standard in surgical care. A part of that commitment, we’ve built a school, the Advanced Centers for Surgical Education. Physicians obviously have to maintain their certifications and standards, as well as continue to grow clinically within their practices. ASCE provides opportunities for them to do that. Victory also owns the largest and only privately held tissue bank in the state of Texas, the Institute for BioResearch, and it serves as ACSE’s exclusive provider of high-quality cadaveric tissue.
Some background: Typically what happens is after a physician graduates, the medical school thanks them, they get their degree and off they go. The latest techniques are typically developed in medical schools and thus only available to the youngest physicians since they’re in school. For physicians who have been in practice for some time, there aren’t a lot of opportunities to gain access to the latest clinical techniques. What we’ve done, in partnership with some of our vendors, is created a school that has all of the latest techniques and technology. We have integrated operating rooms with the latest equipment, video equipment, etc., which allows physicians to either observe or participate in new procedures. With the integrated technology, we can also broadcast our techniques anywhere in the world.
We’re very excited about how this fits into our model and our company’s mission. It’s a huge opportunity and provides a significant amount of healthcare education for our physician partners. We have already received excellent feedback on the facilities, staff and experience, and we’re really proud to have the opportunity to help train this generation and the next generation of healthcare providers.
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